Table source: Office for National Statistics

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Supplementary analysis

The seasonally adjusted index of production fell by 1.7 per cent in October 2011 compared with October 2010. This is the 8th consecutive fall on the month a year ago, the last rise was in February 2011, which was the 12th consecutive increase. Decreases of 11.5 per cent in the mining and quarrying sector and 5.4 per cent in the energy sector were partially offset by increases of 0.3 per cent in manufacturing and 4.0 per cent in the water and waste management sector.

The seasonally adjusted index of production fell by 0.7 per cent between September 2011 and October 2011. The energy and manufacturing sectors both contributed 0.5 percentage points to the fall with decreases of 4.9 per cent and 0.7 per cent respectively. Between the same periods, mining and quarrying increased by 1.8 per cent and the water and waste management sector increased by 0.2 per cent.

Manufacturing

Seasonally adjusted manufacturing output fell by 0.7 per cent in October 2011 compared with September 2011. Eight manufacturing industries sectors fell with five rising. The largest contributions to the month on month fall in manufacturing output were the manufacture of basic metals and metal products industries which fell by 2.1 per cent, followed by the other manufacture and repair industries which fell by 2.9 per cent and the manufacture of basic pharmaceutical products which fell by 2.7 per cent. In contrast, the manufacture of machinery and equipment industries rose by 2.5 per cent in October 2011 compared with September 2011.

In the three months to October 2011 compared with the previous three months, manufacturing output fell by 0.7 per cent. This is the first fall in the 3 months on previous 3 months growth since October 2009.

Mining and quarrying

Output of the mining and quarrying industries fell by 11.5 per cent in October 2011 compared with October 2010. This was the 13th consecutive decrease. The biggest decrease was in the extraction of oil and gas which fell by 14.1 per cent in October 2011 compared with the same month a year ago.

Energy supply

Between October 2010 and October 2011 energy supply fell by 5.4 per cent. Electricity supply decreased by 3.7 per cent and Gas supply decreased by 10.8 per cent. Between September 2011 and October 2011 energy supply fell by 4.9 per cent. Electricity supply was the main driver falling by 4.6 per cent, with October 2011 being the warmest October since 2006.

Water and waste management

Water and waste management rose by 4.0 per cent on the month a year ago and rose by 0.2 per cent between September 2011 and October 2011.

Revisions

This month, the periods open for revision are from January 2010 onwards. Month on month, manufacturing output has been revised down for September 2011 to 0.1 per cent growth. However, the index of production remains unchanged for this period due to the upward revisions of mining and quarrying, energy supply and water supply. Revisions to IoP quarters arising from this release of data are estimated to have a minimal impact on GDP (less than 0.05 percentage points) in all periods open to revision.

Production in detail

The Index of Production (IoP) measures the output of the production industries in the United Kingdom. Figures are adjusted for seasonal variations unless otherwise stated and the reference year is 2008 = 100. For an explanation of the terms used in this bulletin, please see the Background Notes section. Care should be taken when using the month on month growth rates due to their volatility. An assessment of the quality of the production statistics is available in the background notes.

Headline growth rates and contributions to the Index of Production October 2011

Description

% of production

Year on year growth (%)

Contribution to production (% points)

Month on month growth (%)

Contribution to production (% points)

IoP

100.0

-1.7

-1.7

-0.7

-0.7

Sector B

16.4

-11.5

-1.70

1.8

0.23

Division 06

14.1

-14.1

-1.75

2.7

0.28

Sector C

66.6

0.3

0.19

-0.7

-0.46

Sector D

9.3

-5.4

-0.53

-4.9

-0.48

Sector E

7.7

4.0

0.30

0.2

0.02

Table source: Office for National Statistics

Table notes:

Headline figures for the Index of Production are:

Total Index of Production; Sector B Mining and quarrying; and within this Division 06 Oil and gas extraction; Sector C Manufacturing; Sector D Electricity, gas, steam and air conditioning; and Sector E Water supply, sewerage and waste management.

Individual contributions may not sum to the total due to rounding.

The Index of Production is made up four sectors: Mining and quarrying; Manufacturing; Electricity, gas, steam and air conditioning; and Water supply, sewerage and waste management. The larger the percentage contribution, the more likely the impact on the overall manufacturing growth rate will be significant.

Manufacturing consists of 13 sub-sectors listed above with the percentage of the total they account for. The larger the percentage contribution, the more likely the impact on the overall manufacturing growth rate will be significant.

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Sector analysis

Mining and quarrying

The seasonally adjusted index of mining and quarrying in October 2011 fell by 11.5 per cent compared with October 2010. In particular:

oil and gas extraction decreased by 14.1 per cent;

the largest contributor to the 11.5 per cent year on year fall in overall mining and quarrying was approximately 11.9 percentage points from oil and gas extraction.

Manufacturing

The seasonally adjusted index of manufacturing in October 2011 rose by 0.3 per cent compared with October 2010. In detail:

output increased in five of the 13 manufacturing sub-sectors and fell in eight sub-sectors;

the largest increases in output were in the transport equipment industries which rose by 6.6 per cent and in the machinery and equipment industries which rose by 8.8 per cent;

within the transport equipment industries, the main rises were in the manufacture of motor vehicles, trailers and semi trailers (10.6 per cent) and the manufacture of ships and boats (14.9 per cent);

the machinery and equipment industries solely consists of the manufacture of machinery & equipment not elsewhere classified (8.8 per cent);

the largest contributors to the 0.3 per cent year on year rise in overall manufacturing were approximately 0.7 percentage points from the transport equipment industries and approximately 0.6 percentage points from the machinery and equipment industries.

Energy supply

The seasonally adjusted index of the electricity, gas, steam and air conditioning supply industries in October 2011 fell by 5.4 per cent compared with October 2010. The main movements were:

gas; distribution of gaseous fuels through mains; steam and aircon supply decreased by 10.8 per cent;

electric power generation, transmission and distribution increased decreased by 3.7 per cent;

the largest contributor to the 5.4 per cent year on year fall in overall electricity, gas, steam and air conditioning supply was approximately 2.6 percentage points from gas; distribution of gaseous fuels through mains; steam and aircon supply.

Water supply and waste management

The seasonally adjusted index of the water supply, sewerage and waste management industries in October 2011 rose by 4.0 per cent compared with October 2010. The main movements were:

sewerage which increased by 19.3 per cent;

remediation activities and other waste management services which decreased by 2.4 per cent;

the largest contributor to the 4.0 per cent year on year rise in overall water supply, sewerage and waste management was approximately 5.7 percentage points from sewerage.

Revisions

This release conforms to the standard revisions policy for National Accounts. In this release, periods from January 2010 are open for revision.
Since last month, a number of late responses have been received to the Monthly Business Survey. The combined impact of these late data and seasonal adjustment factors being re-estimated is the month on month growth rate for the Index of Production for September 2011 remained unchanged.

Impact on GDP

Revisions to IoP quarters arising from this release of data are estimated to have a minimal impact on GDP (less than 0.05 percentage points) in all periods open to revision.

Summary statistics

Background notes

What's new?

In accordance with the National Accounts revision policy, the current revisions period is open back to January 2010.

The Index of Production publication is released in accordance with the 2007 UK Standard Industrial Classification System (SIC 07). The latest base year for the chained volume measure of IoP is 2008. Further information can be found on the website at:

In the September release of the Index of Production tables IoP5 and IoP5R displayed the incorrect weight for the Consumer Durables series. This has been corrected in the October release. This only affected the presentation within these tables, the incorrect weight was not used in the production of any series with the release.

Upcoming changes

The index of Production release for November 2011 will have a revisions period back to October 2011.

Short Guide to the Index of Production
This Statistical Bulletin gives details of the index of output of the production industries in the United Kingdom. Index numbers of output in this Statistical Bulletin are on the base 2008=100 and are classified to the 2007 Standard Industrial Classification (SIC). The production industries, which accounted for 15.4 per cent of gross domestic product in 2008, cover mining and quarrying (Sector B), manufacturing (Sector C), gas and electric (Sector D), and water supply and sewerage (Sector E).

Interpreting the data
The non-seasonally adjusted series contain elements relating to the impact of the standard reporting period, moving holidays and trading day activity. When making comparisons it is recommended that users focus on seasonally adjusted estimates as these have the seasonal effects and systematic calendar related components removed.
Figures for the most recent months are provisional and subject to revision in light of (a) late responses to surveys and administrative sources and (b) revisions to seasonal adjustment factors which are re-estimated every month and reviewed annually (changes from the latest review are included in this release).

Definitions and explanations
Definitions found within the main statistical bulletin are listed here:

Chained volume measure
An index number from a chain index of quantity. The index number for the reference period of the index may be set equal to 100 or to the estimated monetary value of the item in the reference period.

Index Number
A measure of the average level of prices, quantities or other measured characteristics relative to their level for a defined reference period or location. It is usually expressed as a percentage.

Seasonally adjusted
Seasonal adjustment aids interpretation by removing effects associated with the time of the year or the arrangement of the calendar, which could obscure movements of interest.

Use of the data

The ONS work programme consultation which ended in December 2010 looked at customers views on how ONS could address customers’ needs within a reducing budget.

The Index of Production uses a variety of different data from sources which are produced on either a quarterly or monthly basis.

Most of the indicators are derived using current price turnover deflated by a suitable price index. This includes the Monthly Business Survey (MBS) data; an ONS short term survey on different sectors of the economy. It is one of the main data sources used in the compilation of the Index of Production.

Seasonal adjustment

The index numbers in this Statistical Bulletin are all seasonally adjusted. This aids interpretation by removing annually recurring fluctuations, for example, due to holidays or other regular seasonal patterns. Unadjusted data are also available.

Seasonal adjustment removes regular variation from a time series. Regular variation includes effects due to month lengths, different activity near particular events such as shopping activity before Christmas, and regular holidays such as the May bank holiday. Some features of the calendar are not regular each year, but are predictable if we have enough data - for example the number of certain days of the week in a month may have an effect, or the impact of the timing of Easter. As Easter changes between March and April we can estimate its effect on time series and allocate it between March and April depending on where Easter falls. Estimates of the effects of day of the week and Easter are used respectively to make trading day and Easter adjustments prior to seasonal adjustments.

Deflation

It is common for the value of a group of financial transactions to be measured in several time periods. The values measured will include both the change in the volume sold and the effect of the change of prices over that year. Deflation is the process whereby the effect of price change is removed from a set of values.

All series, unless otherwise quoted, are measured at constant basic prices. Deflators adjust the value series to take out the effect of price change to give the volume series.

Quality

Basic quality information
Common pitfalls in interpreting series: Expectations of accuracy and reliability in early estimates are often too high. Revisions are an inevitable consequence of the trade off between timeliness and accuracy. Early estimates are based on incomplete data.

Very few statistical revisions arise as a result of ‘errors’ in the popular sense of the word. All estimates, by definition, are subject to statistical ‘error’ but in this context the word refers to the uncertainty inherent in any process or calculation that uses sampling, estimation or modelling. Most revisions reflect either the adoption of new statistical techniques, or the incorporation of new information which allows the statistical error of previous estimates to be reduced. Only rarely are there avoidable ‘errors’ such as human or system failures, and such mistakes are made quite clear when they do occur.

Summary quality report
A summary quality report for this Statistical Bulletin can now be found on the National Statistics website.

The 2005 median annual growth of MPI turnover, their associated standard errors and quality bands can now be found on the National Statistics website here.

National Accounts revisions policy
Figures for the most recent months are provisional and subject to revision in light of (a) late responses to the Monthly Business Survey MBS (previously the Monthly Production Inquiry MPI) and (b) revisions to seasonal adjustment factors which are re-estimated every period.

In the next bulletin, which will contain figures for November 2011 and will be published on 12 January 2012, the period open for revision will be from October 2011.

Revision triangles
One indication of the reliability of the key indicators in this bulletin can be obtained by monitoring the size of revisions. The table below is based on the revisions which have occurred over the last five years. Please note that these indicators only report summary measures for revisions. The revised data may, themselves, be subject to sampling or other sources of error.
The table below presents a summary of the differences between the first estimates published between November 2005 and October 2010 and the estimates published 12 months later.

Revisions October 2011

Revisions between first publication and estimates produced 12 months later (percentage points)

Growth rates

Value in latest period

Average

Absolute average

Production - 3 month

-0.2

-0.06

0.26

Manufacturing - 3 month

-0.7

-0.07

0.32

Production - 1 month

-0.7

-0.08

0.26

Manufacturing - 1 month

-0.7

-0.05

0.28

Table source: Office for National Statistics

Table notes:

Averages shown are over the most recent five years. The absolute average is the average over the most recent five years without regard to sign.

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Spreadsheets giving revisions triangles (324.3 Kb ZIP)
of estimates for all months from December 1997 through to the current month, and the calculations behind the averages in the above table, are available on the National Statistics website.

A statistical test has been applied to the average revisions to find out if they are statistically significantly different from zero. No such differences have been found.

The table uses historical data for the most recent 60 months, comparing the estimate at first publication with the estimate as published 12 months later. The numbers which underpin these averages will include normal changes due to late data and re-seasonal adjustment, but also significant methodological changes, the most recent being the introduction of the 2007 Standard Industrial Classification in October 2011.

The complete run of data in the tables of this Statistical Bulletin is also available to view and download in electronic format free of charge using the ONS Time Series Data service. Users can download the complete bulletin in a choice of zipped formats, or view and download their own selections of individual series.

ONS provides an analysis of past revisions in the IoP and other Statistical Bulletins (previously known as First Release) which present time series. Details can be found here.